THE TRIBUNAL DECISION
22 In a detailed decision, the Tribunal considered the position of AP Energy, a non-resident of Australia, which had made a part disposal of shares in Abra on 3 December 2007, giving rise to a capital gain. The Tribunal, on review, decided AP Energy did not pass the PAT in s 855-30(2) ITAA 1997 and it was thus entitled to disregard the capital gain.
23 In summary, the Tribunal relevantly found that:
Abra's TARP assets with a market value of $18,266,434 did not exceed the market value of Abra's non-TARP assets of $23,866,700;
AP Energy did not pass the PAT; and
there was no assessable capital gain on AP Energy's disposal of Abra shares on 3 December 2007,
with the result that the Commissioner's assessment for the year ended 30 June 2008 was excessive.
24 The material difference between AP Energy and the Commissioner's valuation of Abra's assets was the 'market value' of Abra's mining information.
25 It is certainly clear, as the Commissioner contends, that the Tribunal considered RCF (at [67]-[84] and [159]-[167]). Noting that there was no judicial authority or Tribunal decision on the interpretation and application of Div 855 ITAA 1997 and, in particular, the PAT in s 855-30 at the time of the hearing, the Tribunal referred to the decision in RCF that was delivered subsequently. In relation to that decision, the Tribunal noted (at [70]) that the primary matter which determined the outcome in RCF was the United States/Australia Double Taxation Convention, rather than the PAT. Accordingly, the Tribunal noted that the Court's findings as to the application of Div 855 of the ITAA in RCF were obiter and not binding on the Tribunal.
26 Nonetheless, the Tribunal did note that in RCF the primary judge (at [95]), referred to s 855-30(1) ITAA 1997 and spoke of the purpose of the section as being to define when an entity's underlying value is principally derived from Australian real property. The Tribunal noted that the primary judge in RCF found that the subsection is concerned to measure, not the value (singular) of the test entity or all of the assets of its business as a going concern, but the values (plural) of its underlying assets, whether or not used in the business and to define when the sum of the values of its underlying assets are principally derived from Australian real property. Then the primary judge stated (at [95]) that subs (2) provides the criterion for passing the PAT as when the sum of the market value of the entity's assets that are TARP exceeds the sum of the market value of its assets that are non-TARP.
27 The Tribunal observed that the primary judge in RCF said (at [96]) that it was clear from the text of s 855-30(2) that the PAT requires separate determination of the market value of each of the entity's assets, not the determination of the market value of all its TARP assets as a class and the determination of the market value of all its non-TARP assets as a class. The Tribunal also recorded that (at [101]-[102]) the primary judge in RCF accepted Resource Capital's formulation - that an 'asset is to be valued by reference to the hypothetical price it would be agreed between the parties on a stand-alone basis as if no other asset were offered for sale' - as being the correct starting point.
28 However, the Tribunal then cited the statement of the primary judge in RCF (at [102]) that the formulation needs to go further and incorporate the further assumption that in the case of hypothetical transactions involving mining information or plant equipment, the hypothetical purchaser is the owner of the mining rights and, as such, is able to use the relevant asset mining information or plant equipment in a manner consistent with the most advantageous purpose for which it is adopted or its 'highest and best use'. All the experts had agreed in RCF that this was to be considered in a business of mining the reserves in SBM's mining tenements (see RCF at [102]). After citing the primary judge's rejection of the Commissioner's contention that s 855-30(2) requires that the test entity be valued on a combined asset market value, the Tribunal went on to consider what RCF said in relation to the valuation of mining rights (at [105]-[106] and [108]). At [82]-[83], the Tribunal discussed the mid-point approach taken by the Court to arrive at the market value of SBM's mining information:
82. In RCF, the Court accepted the cost of re-creating mining information method and rejected book values as a proxy for the "market value" of "mining information": see RCF at [129], [131], [133], [141], [142], [151] and [153].
83. The Court took a midpoint of the negotiating range to arrive at the "market value" of SBM's "mining information" as follows:
156. For the purpose of valuing SBM's mining information on the hypothesis that it is the only asset offered for sale and on the further assumption referred to in [102] above, the hypothetical price of the mining information, as the determinant of its market value, would be negotiated in a range somewhere between a low point, being the amount to be realised by the hypothetical vendor if no transaction is done (zero), or an equivalent nominal amount on its sale to a purchaser not being the owner of the mining rights, and a high point, being the cost, time delay as well as outlay, to the hypothetical purchaser of re-creating the mining information.
157. While there is an upper and lower point to the hypothetical negotiation range, there is no logical intermediate point guided by any business or financial principle. It follows, that if the task were to predict the outcome of such an actual negotiation, as a question of fact, the Court has no assistance and no evidentiary basis for doing so. But that is not the task here: the task under s 855-30(2) is to ascertain a market value, and the hypothetical sale transaction is no more than a useful and conventional method for doing so. I agree with RCF's submission that an appropriate basis for ascertaining market value in such a case is one which fairly arrives at a value, and that the fair valuation is one which shares equally between the holder, and the potential user, of the relevant asset the benefit to the user of immediate acquisition of the asset. That value is ascertained by dividing the notional "bargaining zone" equally. In this way, the hypothetical price of the mining information, as the determinant of its market value, is arrived at as a mid-point between the maximum that the hypothetical purchaser, as the owner of the mining tenements, might pay to acquire the information (being the amount of outlay and the value of loss of cash flow suffered to re-create it) and the maximum the hypothetical vendor of the information could realise from any other disposal of the information.
29 The Tribunal did not consider RCF again in its reasons until [159]-[167] where it compared the similarities and differences between SBM in RCF and Abra in the present case. This passage was important. I discuss it below.
30 The Tribunal examined and compared:
the 'Limited Scope Valuation of Abra' using the 'residual method' to ascertain the 'market capitalisation' of Abra prepared by Mr Shaun Lonergan of the Australian Valuation Office (AVO Valuation), which the Commissioner relied upon in the assessment and objection decision;
the independent valuation prepared by Xstract Mining Consultants Pty Ltd at the request of BDO Corporate Finance (WA) Pty Ltd (BDO Valuation); and
the 'MKT Valuation Expert Witness Report' prepared by Mr Mathew Longworth of Xstract (MKT Valuation Report) at the instance of AP Energy (through its lawyers, MKT-Taxation Advisors), including the MKT Brief.
31 The Tribunal (at [132]) noted AP Energy's submissions that the AVO Valuation of $10,000,000 for Abra's 'mining information' relied upon by the Commissioner in the assessment and objection decision should be rejected by the Tribunal for the following reasons (in summary form only):
the AVO Valuation of $10,000,000 for Abra's 'mining information' is not a 'fair market value' of Abra's 'mining information', nor is it a suitable proxy for a 'fair market value';
the AVO Valuation of $10,000,000 for Abra's 'mining information' is not a reasonably and objectively determined 'market value' but, rather, is a perfunctory valuation of Abra's 'mining information' using a balance sheet historical cost number;
at the time of the AVO Valuation of $10,000,000 for Abra's 'mining information' the officer who prepared the AVO Valuation (Mr Lonergan) had no specialised expertise (including the senior valuer who countersigned Mr Lonergan's work) or guidelines in relation to the valuation of mineral assets. The AVO's valuation of Abra's 'mining information' comprehends and engages only what the author (Mr Lonergan) considered obvious, 'informed by his own very limited knowledge and experience of mineral asset valuation';
at the time of the AVO Valuation of $10,000,000 for Abra's 'mining information' Mr Lonergan's valuation of Abra's 'mining information' was not assisted by specialised knowledge as to the nature of mining information, the market for mining information and the use of mining information by prospective purchasers;
Mr Lonergan offered no reasonable explanation for not seeking specialised assistance when preparing the AVO Valuation of $10,000,000 for Abra's 'mining information', nor before providing his adverse commentary on Mr Longworth's valuation to the Tribunal;
Mr Lonergan's assertion that the VALMIN Code was not relevant to his limited scope valuation of Abra's mineral asset and eschewing any suggestion that the AVO Valuation of Abra's mineral asset was not best practice as an Associate of the Securities Institute of Australia, an organisation that 'supports the Code as indicative of best practice for independent experts preparing valuations and assessments in relation to specialist mining reports'; and
actual and/or the perception of lack of independence by Mr Lonergan and his advocacy for the respondent.
32 The Tribunal also recorded (at [133]), that AP Energy noted that in cross-examination:
Mr Lonergan, the author of the AVO Valuation, stated that the level of confidence he was expressing in the AVO Valuation was not determined using AVO guidelines which set out objective measures to use for assessing confidence in a value ascertained for a mineral asset;
Mr Lonergan's confidence was subjective and intuitively arrived at on Mr Lonergan's assessment of what he expected someone would pay for mining information that is publicly available from the Department of Mines and what proportion of a mining company's value such publicly available mining information ought attract;
Mr Lonergan dealt with suggestions that he was now unable to weigh matters independently and objectively from another perspective, by asserting that the ATO had no position and no view in relation to relevant aspects of Div 855 ITAA 1997 and the valuation of mining assets; and
Mr Lonergan said on a number of occasions that if he had unlimited funds he would have done things differently.
33 Dealing with the Commissioner's arguments, the Tribunal observed (at [137]) that the Commissioner accepted neither the expertise of AP Energy's witness, Mr Longworth, nor the appropriateness of the methodology on which he relied. The Commissioner contended before the Tribunal that AP Energy's expert reports failed to meet the Tribunal's Guidelines on Opinion and Expert Evidence for a number of reasons (recorded at [138]), including:
whilst 'valuation' is a recognised area of specialist knowledge on which opinion evidence would ordinarily be admissible, nothing had been provided which substantiates the claim that Mr Longworth has valuation expertise. His knowledge, education and expertise identified him as a geologist with expertise in mine management, costing, budgeting and related fields, not valuation;
Mr Longworth was directed by the Commissioner to use a cost-based methodology. He ignores the legislation which requires a market valuation and a summation approach, and he did not undertake a market valuation;
paragraphs 10(b) and (c) of the Tribunal's Guidelines of Expert and Opinion Evidence had not been complied with; and
the tests, calculations and other investigations that had been carried out were poorly explained and were not transparent.
34 The Tribunal noted (at [139]) that, according to the Commissioner, the MKT Valuation Report ought be accorded little weight by the Tribunal for the reasons set out above and also because, amongst other things:
there was no basis for the use of the methodology adopted in the MKT Valuation Report, other than being directed to do so by the client;
no attention was paid in the MKT Valuation Report to the concept of 'market value', as required by the ITAA 1997;
no valuation of the total value of Abra was undertaken in the MKT Valuation Report;
no valuation was given for the mining rights; indeed mining rights were not considered;
Mr Longworth was not able to give an opinion as to the meaning of various provisions in the Mining Act 1978 (WA), as he sought to; and
the wide range of the 'values' ascribed by Mr Longworth typically speak of a lack of confidence in the value ascribed, a criticism of his report identified by Mr Lonergan.
35 The Tribunal referred (at [140]) to the Commissioner's submissions that:
doubt must be cast on the reliability of the MKT Valuation Report when comparison is made between it and the BDO Valuation; and
Mr Longworth knew about the BDO Valuation at the time of drafting the MKT Valuation Report.
36 The Tribunal recorded (at [141]) that, according to the Commissioner:
the cost-based approach used in the MKT Valuation Report was used in the BDO Valuation as a cross-check, but no cross-check was used in preparing the MKT Valuation Report;
despite having looked at the BDO Valuation in the preparation of the MKT Valuation Report, and despite Mr McKibben being satisfied as to consistency of approach between the two reports, Mr Longworth failed to explain in the MKT Valuation Report why raw data for the same periods from the same source differs so markedly between the two reports. This discrepancy could have been explained in the course of preparation of the MKT Valuation Report through the peer review process, but not in cross-examination; and
the ranges adopted in the BDO Valuation (at [40] and [43]), are far narrower than the range in the MKT Valuation Report.
37 The Tribunal set out, in detail, further submissions of the Commissioner (particularly at [142]-[145] and [147]):
142 The Commissioner notes that whilst Mr Longworth in the MKT Valuation Report, and the authors of paragraphs 3.6.3 and 3.7.2 of the BDO Valuation, have adopted the same method of calculating the replacement or replication value in those two reports, the application of that method and the results obtained are inconsistent between them. This demonstrates an inconsistent approach to the same valuation task, i.e. calculating a cost based replacement value of the data: Commissioner's Submissions at p 14 at [40]. That is, according to the Commissioner (see Commissioner's Submissions at pp 14-15 at [41]), in calculating the value of Abra's "mining information" in the MKT Valuation Report, Mr Longworth took the base data, escalated it (i.e. increased it) for inflation, using CPI and the further figures of 3.5% and 5.8%, so as to calculate its "present value", and then discounted that figure by the selected percentages of 12.5% and 25% for publicly available information: MKT Valuation Report at pp 8 - 9.
143 In contrast, the Commissioner asserts (see Commissioner's Submissions at p 15 at [42]), in the BDO Valuation (at p39 at [3.6.3] and pp 42-43 at [3.7.2]):
the same sourced base data has been obtained (albeit, the actual numbers are different; and
those source figures have been escalated, by different inflation amounts to those used in calculating the value in the MKT Valuation Report: compare the BDO Valuation at p 40 at [3.6.3] first, third and fourth dot points;
discounted, to account for the fact that the data would be quicker to obtain with the benefit of hindsight: BDO Valuation at p 40 at [3.6.3], second dot point;
discounted by 15%, to "reflect the affect of age on the usefulness of old data in the mineral estimate process": BDO Valuation at p 40 at [3.6.3], second last dot point; and
discounted, to also "account for the proportion of the work which would be reproduced with the benefit of hindsight": BDO Valuation at p 40 at [3.6.3], last dot point; and
[sic] because much of the prior expenditure is associated with target generation and initial reconnaissance assessment and hence is unlikely to be replicated: BDO Valuation at p 43.
144 As a result, the Commissioner [sic] assertion is that in the MKT Valuation Report (as amended by Mr Longworth's January 2013 Witness Statement) the range of values starts with a low value of $15,229,763, which is only slightly below the calculated actual expenditure (the "Total nominal" figure of $15,839,468 on the annexed "corrected spreadsheet"), and ranges upwards to a value of $29,209,723, which is almost double the actual expenditure, and calculates a preferred value as the mid-point between these two already over-inflated figures. By contrast, in the BDO Valuation the value range is substantially lower than the total actual expenditure of $22,134,292 at both the bottom and top ends, which reach values between $11.51 million and $14.16 million. Consequently the preferred mid-point value of $12,830,000 is also substantially lower than the total actual expenditure. Whilst the actual figures are not directly comparable because of the different timeframes for the valuations, the methodology used and the type of results reached ought to have been, but are not, consistent: see Commissioner's Submissions at pp 15-15 [sic] at [43].
145 Finally, the Commissioner contends that there is no basis to suggest, as submitted by AP Energy, that Mr Lonergan adopted an "ATO view" in his approach to the AVO Valuation. To the contrary, documents S4 - S8 show Mr Lonergan seeking to not follow the "ATO view", as expressed in Taxation Ruling TR98/3, which he had concerns about. Ultimately, the ATO did accept Mr Lonergan's alternative approach. According to the Commissioner, there is no basis for any suggestion that Mr Lonergan was not entirely independent when he wrote the AVO Valuation: see Commissioner's Submissions at p 16 at [44].
…
147 According to the Commissioner, for AP Energy to succeed, the Tribunal must be satisfied that the assessment is excessive. To do that, it must be satisfied that Mr Longworth's preferred valuation of $21,158,707 for "mining information" is reliable as the market value of the mining information at 3 December 2007. This satisfaction must be reached despite:
no consideration having been given to market value;
no consideration having been given to the value of Abra as a whole or the mining rights;
the striking inconsistency between Mr Longworth's approach and that of the AVO;
the striking inconsistencies between Mr Longworth's approach in the MKT Valuation Report and the approach taken by Xstract in the BDO Valuation; and
Mr Longworth's lack of demonstrated valuation qualifications and expertise: see Commissioner's Submissions at p 17 at [46].
38 Importantly, by way of demonstrating that it had considered these detailed arguments, the Tribunal then explained why it preferred the approach of Mr Longworth (at [149]-[158]). The Tribunal concluded (at [149]) that Abra did not pass the PAT in s 855-30 ITAA 1997 and AP Energy could disregard its capital gain on the part disposal of its share in Abra on 3 December 2007.
39 The Tribunal noted (at [150]) that Mr Longworth was not required by the MKT Brief to do anything other than provide a 'market value' for Abra's 'mining information' as at 3 December 2007, and that is exactly what he did. Based on the evidence before the Tribunal, Mr Longworth was not briefed by MKT to undertake a valuation of the total value of Abra's assets as at 3 December 2007 for the reason that AP Energy accepted the 'residual method' used in the AVO Valuation to ascertain the market value of each of Abra's assets, as well as the total market value attributed to Abra by the AVO as at 3 December 2007 of $42,133,134 - the main exception being the value given by the AVO to Abra's 'mining information' (of $10,000,000). For that reason, no valuation of the total value of Abra was undertaken by Mr Longworth.
40 The Tribunal (at [151]) disagreed with the Commissioner's assertion that Mr Longworth lacked the requisite qualifications and expertise to value Abra's 'mining information'. The Tribunal (at [152]) considered that the evidence before it established that Mr Longworth possessed the necessary specialised knowledge to perform the task requested of him in the MKT Brief, being to value Abra's 'mining information' as at 3 December 2007, noting that Mr Longworth refers to his experience as encompassing 'evaluation', which word is a synonym for 'valuation'. The Tribunal (at [152]) also noted that Mr Longworth's expertise, work and conclusions in valuing Abra's 'mining information' were not challenged by the Commissioner in its cross-examination of Mr Longworth. Mr Longworth was simply asked by counsel for the Commissioner to confirm the steps he had taken in valuing Abra's 'mining information'.
41 The Tribunal (at [153]) concluded that having read and considered all of Mr Longworth's evidence (comprising the MKT Valuation, Mr Longworth's supporting data, Mr Longworth's September 2012 witness statement, Mr Longworth's January 2013 witness statement and Mr Longworth's oral evidence), the method by which Mr Longworth reached his valuation of Abra's 'mining information' as at 3 December 2007 was, contrary to the Commissioner's contentions, on a fair and objective reading, clear and transparent.
42 More specifically, the Tribunal noted (at [154]) that, as submitted by AP Energy, to obtain a fair snapshot of Abra's underlying TARP as at 3 December 2007 for the purposes of the PAT, the cost to a prospective arm's length purchaser of regenerating 'mining information', discounted for the use of relevant 'mining information' publicly available, ought to be divorced from the intangible which may arise from 'mining information' and attach to the mining right or real property. The Tribunal considered that this is what Mr Longworth's valuation enabled.
43 The Tribunal (at [155]) agreed with AP Energy's contention that Mr Longworth's valuation of Abra's 'mining information' provided a reliable, conservative and independent expert assessment of the replication cost of Abra's 'mining information' as at 3 December 2007 and that the residual of Abra's enterprise value picks up all the intangible value attracted to Abra's mining rights or real property by its exploration activity.
44 The Tribunal (at [156]) disagreed with the Commissioner's assertion that Mr Longworth did not properly consider the 'market value' of Abra's 'mining information' as at 3 December 2007 and that he 'ignored the legislation'. The Tribunal (at [156]) was of the view, based on the evidence before it, that Mr Longworth provided an expert opinion of the 'market value' of the 'mining information' component of Abra's mineral asset as at 3 December 2007. That is, Mr Longworth did ascertain a 'market value' for Abra's 'mining information', the sunk cost methodology being an acceptable proxy for 'market value'. The Tribunal noted that Mr Longworth had stated that 'an arm's length transaction of the Mining Information alone would be AUD21.6 M at [3 December 2007]'. The Tribunal considered that Mr Longworth's approach to valuing Abra's 'mining information' as at 3 December 2007 was consistent with the Explanatory Memorandum and the case law on the meaning of 'market value', referring to [61]-[66] of its reasons, which I expressly note do not refer to RCF.
45 The Tribunal (at [157]) disagreed with the Commissioner's assertion that '[t]here is no basis for the methodology adopted [by Mr Longworth] other than being directed to do so by [AP Energy]'. The Tribunal (at [157]) was of the view that based on a fair and objective consideration of all of the evidence before it, there was nothing to suggest that Mr Longworth was 'directed' as to what method he should use to value Abra's 'mining information'.
46 The Tribunal (at [158]) also referred to the Commissioner's submissions that pointed to various alleged inconsistencies between Mr Longworth's valuation approach in the MKT Valuation Report and the valuation approach in the BDO Valuation, both reports having been prepared by Xstract but authored by different people within Xstract. The Tribunal (at [158]) was of the view that it was a pointless exercise to draw comparisons between the two reports since, as contended by AP Energy, they were 'not measuring like with like'. The BDO Valuation valued Abra's mineral asset in its entirety, including mining and prospecting information optimised for the purpose of resource estimation. In contrast, in the MKT Valuation Report, Mr Longworth was valuing all of Abra's mining and prospecting information, using a method which starts from the basic premise that the data does not exist or may never have existed.
47 Importantly, after already having decided to prefer Mr Longworth's valuation and methodology, the Tribunal then came back to consider RCF (at [159]-[167] saying:
159. RCF is similar to Abra in that:
(i) the only material tangible asset of SBM (and Abra) which is TARP is SBM's (and Abra's) "mining rights": see RCF at [110]; and
(ii) SBM's (and Abra's) "mining information" and plant and equipment are non-TARP assets: see RCF at [113].
160. However, RCF is different to Abra since:
(i) Abra is an explorer: see Ex A3 at pp 2-5 at [3] and p11 at [6]; Ex A1 at p 150ff and p 203ff (being Abra's 2007 financial statements and 2008 annual report respectively) and Ex R1 at pp i-ii and p 2 at [1.1];
(ii) SBM is a producer. In RCF, the Court states (at [14]-[15] ):
14. SBM at all relevant times conducted a gold mining enterprise on mining tenements in Australia owned by it, using plant, equipment, mining information and other assets held by it...
15. At all relevant times, SBM's fully paid ordinary shares had been listed on the Australian Securities Exchange ("ASX"). The key assets of SBM in the year of income were its Southern Cross and Leonora operations, both of which are located in Western Australia. SBM's Southern Cross operations primarily comprised the Marvel Loch underground mine. SBM's Leonora operations primarily comprised the Gwalia underground mine.
161. The Tribunal agrees with the submission made by AP Energy, that this distinction (i.e. that SBM is a producer and Abra is an explorer) has some important ramifications in this case.
162. In the present case, "market capitalisation" is the accepted starting point of both parties to value Abra, based on the listed share price of Abra as at 3 December 2007, with a control premium (of 25%) added. The Tribunal notes that in RCF, Edmonds J (at [116]) did not reject outright the "market capitalization" method as inappropriate but found the DCF method was to be preferred as reliable. As obiter dicta, his Honour's preference in RCF for the DCF method being used to value SBM (a producer) does not, in the Tribunal's opinion, undermine using "market capitalisation" as an acceptable starting point to value Abra (an explorer).
163. Indeed, while the DCF method using the net present values of future cash flows might be suitable for a producer like SBM, the DCF method may be unreliable and inappropriate in assessing the market value of an explorer like Abra, where there is no defined orebody of assessed economic significance: see the BDO Valuation at p 17 (Overall Opinion) and p 36 at [3.5]) which notes in April 2011 that there is no information available to reliably forecast the future cash flow, Mr Longworth's January 2013 Witness Statement, where he states (at p 7 at [1]) that: "...the tenements in question did not host a defined orebody of economic significance as at the assessment date ..." and Mr Longworth's comments in the MKT Valuation at p 10 at [6].
164 As set out above, the methodology the Court refers to in RCF (in 156] [sic] to [157]) determines a market value for "mining information" by taking a mid-point of a bargaining zone between SBM realising nothing by no transaction to the maximum for a hypothetical purchaser of the cost, time delay as well as outlay, of re-creating the mining information. As submitted by AP Energy, sharing "equally between the holder, and the potential user, of the relevant asset the benefit to the user of immediate acquisition of the asset", does not necessarily transfer readily to the situation of an explorer company like Abra where presently the "highest and best use" is not established to be "a business of mining the reserves in mining tenements". That is, in an explorer company like Abra, where the viability of any mining is still unassessed, the value of the "mining information" is in a sale to a buyer who would have to recreate the "mining information" in order to continue exploration to identify an ore body of economic significance. In RCF, the Court had a full valuation of the mining asset of SBM (a producer) where discounted cash flows were available for ongoing feasible mining operations. That is not the case here. Consequently, the Tribunal considers that the approach taken by the primary judge (at [157]) in RCF to determining the "market value" of "mining information" cannot automatically be said to apply to an explorer, such as Abra.
165 Further, the Tribunal notes Edmond J's acceptance of the expert evidence given by Mr Eshuys whose qualifications and specialised knowledge are not dissimilar to Mr Longworth's. At [84] in RCF, the Court states that:
Mr Eshuys is currently Executive Chairman of Drummond Gold Limited. Between 24 July 2004 and 9 March 2009, he was Managing Director and Chief Executive Officer of SBM. He holds a Bachelor of Science majoring in Geology from the University of Tasmania. He is a fellow of the Institute of Mining and Metallurgy (Aus/MM). He has over 40 years experience in the resource industry in Australian [sic] and in 1996 was awarded the Geology Society of Australia's Joe Harms Medal for distinction in exploration success and project development.
166 The Court's reasons at [84] to [91], concerning Mr Eshuys' evidence, are apposite in rejecting the Commissioner's submissions about Mr Longworth's expertise and reports. In particular, in RCF (at [84]) the primary judge makes the following comment regarding Mr Eshuys' evidence:
Having regard to the whole of Mr Eshuys' affidavit evidence...,; his evidence in cross-examination....; and his evidence in re-examination...., I am satisfied that Mr Eshuys has requisite "specialised knowledge based on [his].....study or experience".....regarding the creation of mining information - how long it would take to undertake the drilling and subsequent analysis to acquire it and the costs associated therewith - and, it follows, the recreation of such information.....
167 In conclusion, the Tribunal is informed by the Court's decision in RCF as follows:
an appropriate basis for ascertaining "market value" for the purposes of the PAT in s 855-30 of the ITAA 1997 is one which fairly arrives at a value;
the use of "market capitalization" [sic] and the "residual method" were not rejected outright by the Court in RCF and provide an acceptable valuation methodology in the present case (Abra being an explorer and not a producer like SBM in RCF);
Mr Longworth is appropriately qualified to assist the Tribunal with his specialized [sic] knowledge and experience;
Mr Longworth's valuation of Abra's "mining information" as at 3 December 2007 is consistent with the reasons for judgment in RCF, and is a reliable specialist valuation of the fair "market value" of Abra's "mining information" asset at 3 December 2007;
the sunk cost methodology as adopted by Mr Longworth is acceptable in determining the "market value" of "mining information".
Mr Longworth's valuation as stated the MKT Valuation Report (at pp 9-10) and in his conclusion in Mr Longworth's January 2013 Witness Statement is a fair mid-point market valuation of Abra's "mining information" as at 3 December 2007; and
the residual intangible or "marriage value" of the "specialised assets" - mining information, mining rights and plant and equipment, is not a TARP asset.
(emphasis added)
48 The similarities referred to in [159] may be disregarded as they are no more than the basic common ground. The balance of the content of [160]-[167] require closer analysis in order to determine whether or not the Tribunal did, in fact, take an approach later the subject of disapproval in RCF FC.